North Carolina's Renewable Energy and Energy Efficiency Portfolio Standard (REPS) includes CHP as an eligible resource. Energy from CHP is included to the extent that the system "uses waste heat to produce electricity or useful, measurable thermal or mechanical energy for the retail customer's use and results in less energy used to perform the same function or provide the same level of service at the retail customer's facility." Thermal energy that is not used to generate electric power, and is measured in Btus, earns equivalent Renewable Energy Certificates (RECs) using a conversion factor of 3,412 Btu/kWh.

The REPS requires all investor-owned utilities (IOUs) to supply 12.5% of 2020 retail electricity sales from eligible energy resources by 2021. Municipal utilities and electric cooperatives must meet a target of 10% of electricity sales from eligible energy resources by 2018. Up to 25% of the requirements may be met through energy efficiency measures, including CHP systems powered by non-renewable fuels. After 2021, up to 40% of the standard may be met through energy efficiency, including CHP. Utilities may meet their obligations through actual generation of electricity with eligible fuels and technologies, through the purchase of RECs (each equivalent to 1 MWh) from in-state or out-of-state renewable energy facilities, or through the implementation of energy efficiency measures.

CHP Eligibility Requirements

CHP using renewable fuels qualifies under the renewable portion of the standard. Fossil-fueled CHP and waste heat-to-power systems qualify as efficiency measures, which can provide up to 25% of the RPS requirements through 2021. After 2021, up to 40% of the standard can be met through energy efficiency, including CHP. Eligible projects must have been installed on or after January 1, 2007.